One on One: CAC's Jim Facette

by John F. Infanger On Aug 26, 2009

The president of the Canadian Airports Council, Jim Facette, relates that considering the economic times, his membership is seeing traffic declines in the 4 to 6 percent range, compared to double digit drops in the U.S. It’s the cross-border incoming activity from the south that is significantly down. The airport rent relief issue remains, but a new cooperative tourism venture could have an impact — if the CAC’s argument gets some traction. Obstacles to competitiveness are targets, while Open Skies agreements are welcome. AIRPORT BUSINESS recently interviewed Facette on the state of airports in Canada. Following are edited excerpts ...

AIRPORT BUSINESS: How would you characterize the economic environment at Canadian airports today?

Facette: Our passenger numbers are down. It varies geographically and by the type of passenger. Some airports have seen as much as a 14 percent decrease in U.S. passengers coming up to Canada, but domestic traffic might only be down 4-6 percent. Compared to our friends south of border, it’s probably not as bad as the U.S. Domestic traffic relative to the economic times is holding its own.

The carriers might say while there are bums in the seats, their yields aren’t what they would like. We’re in a climate where the carriers are making capacity adjustments. So planes look full but the capacity is down.

AB: Capacity cuts in turn are putting more pressure on airports to take on a customer service role in the U.S. Same situation in Canada?

Facette: In Canada that’s been the way for 15 years. The customer service perspective in Canada is driven by the airport management model of the non-share capital corporation. It’s really driven airport authorities to be customer focused.

So you’ve got situations here like the most recent announcement — self-tagging of bags. The top eight airports in Canada will roll out self-tagging of bags. This was a pilot in Montreal and there were an awful lot of our members who were interested.

The focus is also on kiosks; we use kiosks in Canada quite a bit to make life easier. There’s a move toward a standardized 2-D barcode for which you can get on your Blackberry or PDA to get you through Customs. So you’ll have a paperless boarding card; I use it all the time.

AB: Would you agree that capacity cuts are having an impact on customer service for airports?

Facette: It totally is. Carriers want to make money and there’s nothing wrong with that, so they have to pay attention to their yields; to the amount of supply they have in the marketplace. Where there are backups at airports due to delays or cancellations, it really places the need for airports to be aware of what’s going on and make the passenger experience the best it can be, given the circumstances.

AB: What’s the status of getting rent relief for airports from the feds?

Facette: At this point it’s really hard to say. We have this summer spent a great deal of time on airport rent. If there was any sort of glimmer of hope, in June the Prime Minister and Minister of Tourism and Small Business announced that the federal government, with the cooperation of the provinces and the territories, would develop a tourism growth strategy.

Part of that we believe is addressing the costs of flying into Canada. Canada prides itself as being a destination for international travelers. Airport rent is part of the costs of carriers coming into Canada.

We have done a return on investment study this summer and will present it to our respective ministers, the Cabinet level, in a few days.

Some of the highlights of that study [show that] at the end of the day elimination of airport rent we see accruing in excess of $730 million annual benefit to the Canadian economy, both direct and in incremental benefits. We’re talking creating over $300 million in expenses by new travelers to Canada, and those new travelers to Canada would total 580,000 that would be generated by the elimination of airport rent.

Rent elimination is the ultimate. Our airports have more than paid the asset value; airports in Canada have invested more than $9.5 billion in their infrastructure without any tax assistance. We say, you’ve gotten your money back [but] you’re still collecting $280 million a year on airport rent. Imagine how that can be used back into the system?

AB: The issue of competitiveness is a hot button with CAC.

Facette: Rent falls under that; another thing is we have spent a lot of time presenting a competitiveness angle. In the U.S. you have foreign trade zones; we don’t have any at all. We believe the time is long overdue for airports to work with the manufacturing and the other transportation communities to develop foreign trade zones.

A lot of the things we’re doing in Canada go to that very point, competitiveness. Airports in Canada want to position themselves to compete with the best in the world.

AB: And the federal government is making progress on Open Skies agreements.

Facette: The board position of the CAC is a simple one: Members are supportive of Open Skies, period. We are very pleased and really look forward to the full ratification of the Canada-EU Open Skies agreement. We’re optimistic that that will be done this fall and we will see a fall formal signing. And now with South Korea.

We’re getting our way there incrementally. Is it important to go faster? Yes. The U.S. has over 90 agreements.

AB: CAC was working with Transport Canada to determine the environmental footprint of airports. What’s the status of the initiative?

Facette: CAC is working with Transport Canada so when it does consider any new regulations, which we’re not looking for, that they write policies that come from ICAO and its current efforts and that they actually make sense.

There’s some progress. In June 2007 under then-chairman Jim Cherry, we wrote Transport Canada and said we think there’s a need for some type of environmental plan in aviation in Canada. We are working with Transport Canada to come up with a standard way to measure the greenhouse gas footprint that exists on the ground at airports across Canada. Some airports like Toronto and Montreal have already moved ahead.

Also recently, we’ve agreed to sit around the table with the carriers, with NavCanada, ourselves, and Transport Canada to see if we can as an industry come up with a memorandum of understanding to commit to work in various ways to reduce greenhouse gases in Canada.

If you look at the broader context of airports in the world, and look at what the ACI-NA board of directors recently did in June as well as what ACI World and other regions have done, what Canada is doing is a part of a continuum of where airports have said that we’re going to do our part, and here’s what our part is.

AB: What serious cross-border issues remain?

Facette: There’s one issue that has not gone away: the rescreening of bags coming from Canadian pre-clearance airports. It’s a low-hanging fruit issue. A harmonization, a recognition that the screening standards in Canada are equal to that which exists in the United States is important. We’ve costed out a huge savings on the U.S. side that can be achieved by eliminating it. We don’t believe it’s necessary.

AB: The 2010 Winter Olympics are coming up in Vancouver. What impact is that having?

Facette: Vancouver and [British Columbia-]-based airports have really been engaged in that from a capacity and security perspective, and a winter maintenance perspective. The winter last year in Vancouver was sort of unprecedented in the area, and the ability to handle that weather again became a question.

The addition of new technology to handle Customs will really help. It’s a kiosk system; you show your passport; you’re given some paperwork; and while you’re doing that there’s somebody ahead of you going to a document check officer. So you double your throughput.